OBBBA Tax Deduction for Warehouse Workers
Warehouse and fulfillment-center workers regularly see scheduled and mandatory overtime, especially during peak season (holiday shipping surges). The deduction applies to the FLSA overtime premium — not the various surge-pay and incentive programs many warehouses run during peak.
Qualifies
- The overtime premium (extra 0.5×) on hours over 40/week for non-exempt hourly workers
- Mandatory overtime shifts during peak season, to the extent they generate a true overtime premium
Doesn't qualify
- Peak-season "surge pay" or attendance bonuses — these are separate incentive pay, not the FLSA overtime premium
- Shift-differential pay for overnight or weekend shifts
- Salaried leads or supervisors classified as FLSA-exempt
Worked example
A single filer with $42,000 regular wages + $5,500 overtime premium pay (federal only — your state may also tax this income; check the State Conformity Tracker):
- Net OBBBA deduction: $5,500
- Estimated federal tax saved: $1,210
- FICA still owed on overtime pay: $1,262 — not reduced by this deduction
Common questions
My warehouse pays extra "surge pay" during peak season — does that count?
No. Surge pay and attendance incentives during peak season are separate bonus pay, not the FLSA overtime premium, so they don't factor into the OBBBA deduction.
Do mandatory peak-season overtime shifts qualify?
Yes, to the extent they generate a true FLSA overtime premium — the same 0.5× rule that applies to any other overtime hours over 40 in a week.